Economics and War & Peace

I am not a 'war and peace' economist, only an economist who has some comments on the work of other economists who discuss such issues.

Also, my main advice is that democratic nations adopt a constitutional amendment for an Economic Supreme Court - see DRGTPE (or if you are in a hurry, see the earlier working paper in html that is improved upon in DRGTPE).

Having an Economic Supreme Court makes that science gets a level playing field with political management (and economics is the science of management of the state). Having an Economic Supreme Court makes that we have a better decision making structure, to settle complex issues.

DRGTPE takes unemployment as the key example of how the absence of an Economic Supreme Court causes a socially worse situation. But the issue of war and peace would be another example. And the end of his life, Jan Tinbergen indeed turned to the issue of war and (inter-) national security. Outlays for defence are huge, and if we would find other ways for security, then these resources could be used for development and the growth of welfare. James Galbraith now is chairman of ECAAR - and a fine economist as well, working at UTIP - and presents the same line of thinking. 

In general, dire situations need not result into war and oppression. In the Great Depression in thh 1930s, Germany fell to dictatorship and war, but the US remained a democracy. 
David M. Kennedy, “Freedom from fear. The American people in depression and war, 1929-1945”, Oxford 1999, however shows that FDR feared that Huey Long was working towards a form of dictatorship - and FDR had to work hard to prevent Huey Long from taking command. The correct approach seems to be that dire situations like unemployment are risk factors, and that it is best to minimise those factors.

Sadly, policy makers appear slow in minimising those risk factors. Part of the cause will be that policy makers become more important members of society when there is a conflict. It is part of politics to create a conflict in order to achieve one's goals.

Apart from this general observation, there are the details of specific conflicts. Earlier, I already took a stand on Kosovo - which in itself is more a political stand but can also be considered from a scientific point of view. 

In the same vein, there now is the "War on Terrorism", after the awful terrorist attacks on New York and Washington. For reasons of time, my comments have to be short. These comments again are more of a political stand, but can also be considered from a scientific point of view.

  • This is a full paper, and the following are a summary:
  • These terrorist attacks are awful.
  • As I have been a foreign exchange student to the US in 1972-73, my sympathies go out to the American people for this national tragedy.
  • This is terrorism and not an actual war. The NATO article 5 does not really apply, though there should be an interntional effort.
  • The US should avoid being a judge in its own case. 
  • The proper authority is the UN.
  • The proper reaction combines strength with compassion and wisdom. Strength to fight against terrorism and to contain dictatorial nations. Compassion for the (potential) victims in such countries. Wisdom to create the economic conditions that minimise the risk factors of unemployment, environmental degradation, etcetera.
  • Up to now, President Bush has shown himself a weak president. He spoke of 'justice' in the tone of 'revenge', divides the world in 'for us or against us', and fuels the spiral of violence. Note that elections are up in only three years, and it is a well known fact that encumbants tend to benefit from times of war when people rally around their leader. Who opposes such a war is easily dismissed as a 'traitor'.
  • A strong President would ask the American people to show restraint, and he or she would ask: "Let us think again: Why are we hated so much ?" He or she would call for an international economic initiative, like a Marshall Plan.
  • Economic analysis shows that the latter would also be best (unless you think that war, revenge and killing are preferable).

Thomas Cool, September 25 & November 11, 2001

General other links